Real wages in Ukraine to exceed pre-crisis level by end of 2024 - NBU

MOSCOW. Nov 11 (Interfax) - Real wages in Ukraine are expected to grow 14% in 2024, exceeding the pre-crisis level by the end of this year, Ukrainian media cited the National Bank of Ukraine (NBU) as saying in its inflation report for October 2024.

"The upward trend in wages will continue in the coming years as employers compete for workers. Along with the soft fiscal policy, it will contribute to further growth of consumer demand," the NBU said.

The NBU raised its forecast for real wages growth in the country from 9.7% to 14% in 2024, and from 5.8% to 6.5% in 2025, the report said. Real wages in Ukraine dropped 11.4% in 2022, then rising by 3.7% in 2023.

"The shortage of workers on the labor market continues to fuel wage growth. In particular, average real wages increased 17.6% and grew 22.1% in nominal terms in the second quarter of 2024 year-on-year. The indirect data available indicates that wages in nominal terms continued to grow at a rapid pace in the third quarter as well," the NBU said.

Meanwhile, the increased inflationary pressure caused real wages growth to slow somewhat, though the rate of growth remained quite high and continued to buoy private consumption, it said.

Following an increase by 17.4% last year, wages in nominal terms are expected to grow by a further 21% in 2024, and by 16% in 2025, it said.

The unemployment rate, which rose from 9.8% to 21.1% in 2022 and subsequently fell to 18.2% in 2023, will gradually decline further as demand for the workforce increases, but will remain higher than before the crisis, the NBU said.

"It will be limited by the persistence of imbalances in the labor market primarily because of the limited supply of skilled workers due to the effects of the crisis," the NBU said.

Unemployment will also be limited by migration process and migrants' subsequent adaptation abroad, thus reducing the probability of their massive and rapid return to Ukraine, it said. "Due to migration and changes in the economy structure, the impact of imbalances on the workforce market will vary by region and by industry," it said.

In its updated forecast, the NBU rose its employment estimate from 13.9% to 14.2% as of the end of 2024, and from 11.4% to 11.6% as of the end of 2025.

The Advander survey findings, published in the NBU inflation report, show that the country's enterprises were staffed by 71% in August 2024, though nearly a quarter (23%) of them were staffed by less than 50%.

The results of a survey among Ukrainian enterprises, published in the NBU report for the third quarter of 2024, show that the balance of answers regarding the number of employees over the next 12 months remained negative at 10.9%, with 12.3% of enterprises expecting their staff to increase, and 23.2% of enterprises expecting their staff to shrink. Enterprises operating in all industries are expecting a reduction of their staff. The number of such enterprises is the largest (20%) in the construction sector and the smallest (5.2%) in the retail sector.